Up Next, College | Capital Group

Here's what other parents are asking

Three approaches to college loans

Paying for college is a big step for anyone. If you’re considering taking on a student loan, you’ll need to decide whether you should shoulder the whole amount, have your child take the responsibility or share the weight together. Take a closer look at the pros and cons of each scenario.

  • Understand and evaluate the different ways to handle student debt.
  • Weigh the options of having your child take on more debt or borrowing the money yourself.
  • Consider the benefits and responsibilities that come with sharing these important financial decisions.
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When your child doesn't need a 529 savings plan after all

Life is full of surprises. Whether your child earned a full scholarship to the college of his choice or opted to become a full-time artist instead, your 529 savings plan is still a valuable investment. Maybe the money won’t be used as you originally intended, but you can still benefit from the flexible options available to you.

  • Be assured that the money you've saved is all yours, no matter what.
  • Look for other ways to use the assets in your 529 savings plan.
  • Consider transferring the account to another beneficiary.
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Ready, set ... it’s almost time to go!

Even though your college-bound teenager may be squeezing in every minute she can with her friends, you’ve got a lot of wisdom to share. Sitting down with your teenager and helping her get her head around the financial realities of college can help her feel more prepared and give you two a little quality time.

  • Set her up for success by helping her get her finances in order.
  • Approach credit cards with caution, and discuss responsible ways to build a credit history.
  • Understand the basics of student loans, even though repayments may not be required until after graduation.
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Savings calculator

Don’t let the need to be perfect stop progress. Even if you can only save $50 a month right now, you’ll still be ahead of the game.

If I save       a month

Starting

Birth 18 years old

Estimated savings when my child is 18 years old:

$0*

That's about 0% what you'll need for four years of in-state tuition fees.

* Assumes a hypothetical annual growth rate of 6%. For illustrative purposes. Not intended to portray an actual investment.

Ready to create a detailed plan?

Go to the college calculator
Savings if you started today
$ 0
Savings if you started after 0 years
Go to the college calculator

Give it a boost!

save taxes iconYearly bonus? Tax refund? Put part — or all — of it into your 529 education savings plan.

on track iconAsk for gifts toward your child’s 529 savings plan on birthdays and holidays.

on track iconHave your child join in the effort.
Lemonade stands and part-time jobs can help grow the funds, too.

It’s better to start somewhere and start now. Small savings can make a big difference over time.

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CollegeAmerica 529 savings plan basics

Saving for education is like planning a big trip — getting to your destination takes a good plan. A 529 savings plan is a popular way to save for college.

A CollegeAmerica 529 savings plan makes it easy.

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Flexible

Use a 529 savings plan for more than college tuition, including housing, required books and computer equipment.

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Save on taxes

The earnings on your 529 savings plan investments are exempt from federal taxes, and in many cases, there is a state tax benefit as well. Tax-advantaged treatment applies to savings used for qualified education expenses. State tax treatment varies.

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Transferable

A 529 savings plan can be transferred to cover the eligible educational expenses for a family member of the original beneficiary.

Learn more about 529 savings plans
Compare savings options

Have more questions?

Wondering how to save for your child’s education? Get answers about opening an account, making contributions and withdrawals, updating your beneficiaries and more.

Expand all

What educational institutions are eligible?

  • Most U.S. community colleges
  • Public and private four-year colleges, universities and vocational schools in the U.S.
  • Some institutions outside the U.S.

    Visit the Department of Education's federal school code search page for a quick way to check if a particular institution qualifies.

What if 529 savings plan assets aren’t used for qualified expenses?

Try to avoid withdrawing money for nonqualified expenses. If you use your 529 savings plan assets for nonqualified expenses, you could owe federal income tax on the withdrawal, plus a 10% penalty on the earnings. You may owe state tax as well. States take different approaches to the income tax treatment of withdrawals, so state tax may vary.

Can the beneficiary be a part-time student?

Yes! However, in order for room and board expenses to be covered, the student has to be enrolled on at least a half-time basis.

View all FAQs

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CollegeAmerica 529 savings plan

You trust your doctor with your health and your mechanic with your car. You shouldn’t settle for anything less when you’re deciding where to invest your money.

Trusted by more than 1 million families nationwide, CollegeAmerica is the country’s largest 529 savings plan,1 with more than $66 billion invested.2

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why us background image

We're helping more than 2.4 million future students pursue their dreams.3

  • Any adult who's a U.S. citizen or legal resident can open a CollegeAmerica 529 savings plan, regardless of income.
  • The earnings in a 529 savings plan are exempt from federal taxes if withdrawals are used for qualified expenses. And some states offer tax benefits as well.
  • CollegeAmerica fees are among the lowest in the industry.4
  • If withdrawals are used for purposes other than qualified education expenses, the earnings will be subject to a 10% federal tax penalty in addition to federal and, if applicable, state income tax. States take different approaches to the income tax treatment of withdrawals. For example, withdrawals for K-12 expenses may not be exempt from state tax in certain states. State tax treatment varies.
  1. Largest by assets, according to the 1Q 2020 "529 College Savings Quarterly Update" from ISS Market Intelligence.
  2. As of March 31, 2020, CollegeAmerica AUM is $66.4.
  3. Number of accounts as of March 31, 2020, Strategic Insight.
  4. "529 College Savings Quarterly Fee Analysis," ISS Market Intelligence, 4Q 2019. CollegeAmerica’s fees were in the top quartile of 30 and 18 plans based on the average annual asset-based fees for national advisor-sold and fee-based advisor-sold 529 plans, respectively.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses, summary prospectuses and CollegeAmerica Program Description, which can be obtained from a financial professional and should be read carefully before investing. CollegeAmerica is distributed by American Funds Distributors, Inc. and sold through unaffiliated intermediaries. 

Depending on your state of residence, there may be an in-state plan that provides state tax and other state benefits, such as financial aid, scholarship funds and protection from creditors, not available through CollegeAmerica. Before investing in any state's 529 plan, investors should consult a tax advisor. 

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation. 

American Funds Distributors, Inc., member FINRA.

This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.

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